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XL Axiata, Smartfren to join forces in $6.5b merger
If the merger goes through, Axiata and Sinar Mas will each own 34.8 percent in XLSmart with “equal influence” over the firm’s strategic direction.
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A pedestrian uses his smartphone while walking on a sidewalk in Jakarta in February 2019 past an advertisement for Indonesian telecommunications service provider XL Axiata. (AFP/Bay Ismoyo)
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T XL Axiata and PT Smartfren Telecom have announced an agreement to merge their businesses, with XL Axiata to be the surviving entity and remain listed on Indonesia Stock Exchange (IDX).
The combined entity, which would be renamed PT XLSmart Telecom Sejahtera, would have an enterprise value of US$6.5 billion, according to the companies.
The transaction has been approved by the boards of both XL Axiata and Smartfren and is expected to be completed in the first half of next year, pending regulatory and shareholder approval.
Assuming the merger goes through, Indonesia will be left with three telecommunication service providers, down from five in 2021, when a similar deal was struck between PT Indosat Ooredoo and PT Hutchison 3 Indonesia.
That merger was finalized in January 2022, with the resulting entity, Indosat Ooredoo Hutchison (IOH), valued at $6 billion at the time.
As part of the current merger, XLSmart is to issue new shares to Smartfren’s stakeholders. Sinar Mas Group, the majority stakeholder in Smartfren, is to hold a 21.7 percent stake in XLSmart, while the previous majority owner Axiata will see its stake decrease from 66.5 percent to 47.9 percent.
Concurrently, Sinar Mas is to acquire an additional 13.1 percent stake in XLSmart from Axiata at a cash consideration of $475 million. Upon completion of the process, Axiata and Sinar Mas are to each own 34.8 percent in XLSmart to become joint controlling shareholders with “equal influence” over the firm’s strategic direction.
